Seagate 2011 Annual Report Download - page 32

Table of Contents
If we cannot fund our liquidity needs, we will have to take actions such as reducing or delaying capital expenditures; product development
efforts, strategic acquisitions, investments and alliances, and other general corporate requirements. We cannot assure you that any of these
remedies could, if necessary, be effected on commercially reasonable terms, or at all, or that they would permit us to meet our scheduled debt
service obligations. In addition if we incur additional debt, the risks associated with our substantial leverage, including the risk that we will be
unable to service our debt or generate enough cash flow to fund our liquidity needs, could intensify.
Restrictions Imposed by Debt Covenants
—Restrictions imposed by our senior secured revolving credit facility and the indenture governing
our 10% Senior Secured Second-Priority Notes due 2014 may limit our ability to finance future operations or capital needs or engage in
other business activities that may be in our interest.
Our senior secured revolving credit facility and the indenture governing our 10% Senior Secured Second-
Priority Notes due 2014 (the "10%
Notes") impose, and the terms of any future debt may impose, operating and other restrictions on us. Subject to qualifications and exceptions,
our senior secured revolving credit facility and such indenture limit, among other things, our ability to:
• incur additional indebtedness and issue certain preferred shares;
• create liens;
•
pay dividends or make distributions in respect of our capital stock;
• redeem or repurchase capital stock or debt;
• make certain investments or other restricted payments;
•
sell assets;
•
issue or sell capital stock of subsidiaries;
• enter into transactions with affiliates;
• engage to any material extent in business other than our current business; and
•
effect a consolidation or merger.
The credit agreement that governs our senior secured revolving credit facility contains certain covenants that we must satisfy in order to
remain in compliance with the credit agreement, including three financial covenants: (1) minimum cash, cash equivalents and short-term
investments; (2) a fixed charge coverage ratio; and (3) a net leverage ratio. A breach of any of the covenants in our debt agreements, including
our inability to comply with the required financial ratios, could result in a default under our senior secured revolving credit facility. If a condition
of default occurs, and we are not able to obtain a waiver from the lenders holding a majority of the commitments under our senior secured
revolving credit facility, the administrative agent of our senior secured revolving credit facility may, and at the request of lenders holding a
majority of the commitments shall, declare all of our outstanding obligations under our senior secured revolving credit facility, together with
accrued interest and other fees, to be immediately due and payable, and may terminate the lenders' commitments thereunder, cease making
further loans and, if we cannot repay our outstanding obligation, institute foreclosure proceedings against our assets. If our outstanding
indebtedness were to be accelerated, we cannot assure you that our assets would be sufficient to repay in full that debt and any potential future
indebtedness, which would cause the market price of our ordinary shares to decline significantly. We could also be forced into bankruptcy or
liquidation.
In addition, some of the agreements governing our other debt instruments contain cross-
default provisions that may be triggered by a default
under our senior secured revolving credit facility. In the event that we default under our senior secured revolving credit facility, there could be an
event of default under cross-default provisions for the applicable debt instrument. As a result, all outstanding obligations under
29